Get Ready to Pay the Costs of a New Cold War With China

America's pundits and politicians have largely concluded that a new Cold War with China--a period of intense hostility and competition falling just short of armed combat--has started. "Rift Threatens U.S. Cold War Against China," as a New York Times headline put it on May 15th, citing recent clashes over trade, technology, and responsibility for the spread of Covid-19. Beijing's decision to subject Hong Kong to tough new security laws has only further heightened such tensions. President Trump promptly threatened to eliminate that city-state's special economic relationship with this country, while imposing new sanctions on Chinese leaders. Meanwhile, Democrats and Republicans in Congress are working together to devise tough anti-Chinese sanctions of their own.

For anyone who can remember the original Cold War, the latest developments may seem eerily familiar. They bring to mind what occurred soon after America's World War II collaboration with the Soviets collapsed in acrimony as the Russians became ever more heavy-handed in their treatment of Eastern Europe. In those days, distrust only grew, while Washington decided to launch a global drive to contain and defeat the USSR. We seem to be approaching such a situation today. Though China and the U.S. continue to maintain trade, scientific, and educational ties, the leaders of both countries are threatening to sever those links and undertake a wide range of hostile moves.

Admittedly, some of the steps being discussed in Washington to punish China for its perceived bad behavior will have little immediate impact on the lives of Americans. A lot of the threats, in fact, may turn out to be little more than good old-fashioned chest thumping. Consider, for instance, the proposal floated by the top-ranking majority and minority members of the Senate Armed Services Committee, Oklahoma Republican Jim Inhofe and Rhode Island Democrat Jack Reed, to fund a multibillion dollar "Pacific Deterrence Initiative" intended to bolster American forces in Asia. That effort, they avowed, will "send a strong signal to the Chinese Communist Party that the American people are committed to defending U.S. interests in the Indo-Pacific."

Well, that was easy! All we, the taxpaying citizens of the United States, need to do in this opening salvo of a new Cold War is salute Congress as it funnels yet more billions of dollars to the usual defense contractors and thereby "send a signal" to Beijing that we will "defend U.S. interests" somewhere far across the globe. (Now there's a moment to wave your American flag!)

But don't count on such a moment lasting long, not if a new Cold War starts in earnest. A quick look back at the original one should remind us that we'll all pay a price of some sort for intensifying hostility towards China (even if a hot war isn't the result). Perhaps, then, it's none too soon to consider how such a world would impact you and me.

A Feeble Economic Recovery

For most Americans, the first consequence of an intensifying Cold War could be a weaker than expected recovery from the Covid-19 economic meltdown. Anything that stands in the way of a swift rebound--and a new Cold War with China falls into that very category--would be bad news.

Unlike in the original Cold War, when Washington and Moscow maintained few economic ties, the U.S. and Chinese economies remain intertwined, contributing to the net wealth of both countries and benefiting this country's export-oriented industries like agriculture and civilian aircraft production. Admittedly, such ties have also harmed blue-collar workers who have watched their jobs migrate across the Pacific and tech companies that have seen their intellectual property purloined by Chinese upstarts. Donald Trump stoked resentments over just such issues to get himself elected in 2016. Since then, he's sought to disentangle the two economies, claiming we would be better off on our own. (America first!) As part of this drive, he's already imposed stiff tariffs on Chinese imports and blocked Chinese firms from gaining access to American technology.

Feel free to argue about whether China has abused international trade rules, as Trump and his allies have charged, and whether imposing tariffs (paid for by American importers and consumers, not Chinese suppliers) is the best way to address that country's economic rise. The key thing to note, however, is that economic growth in both places had slowed in the wake of Trump's trade war even before Covid-19 hit. As 2019 drew to a close, in fact, the prospect of yet higher tariffs and intensified economic warfare was already dragging down the whole global economy.

And while some experts believe that a relaxation of tariffs and other steps to improve U.S.-China trade would stimulate the economy in tough times, Trump and his China hawks, led by Secretary of State Mike Pompeo and White House trade adviser Peter Navarro, appear to view this moment as the perfect opportunity to double down on anti-Chinese measures. The president has already hinted that he's prepared to order yet more tariffs on Chinese products and take other steps to hasten the "decoupling" of the two economies. "There are many things we could do," he told Maria Bartiromo of Fox Business in mid-May. "We could cut off the whole relationship."

Cut off the whole relationship? Some policymakers claim that such a decoupling would stimulate growth at home as American firms shifted manufacturing back to the United States and its close allies. This argument, however, ignores two key factors when it comes to Americans desperate for work now: first, many of the tasks currently performed by Chinese workers will be shifted to plants in Mexico, Thailand, Vietnam, and other low-cost manufacturing hubs; and second, any relocation of entire production lines to this country will take years to accomplish and, in the end, undoubtedly wind up employing more robots than workers. Bottom line: economically, an intensifying Cold War is guaranteed to scuttle any chances of a rapid recovery from the Coronavirus Depression, dampening employment prospects for millions of Americans.

Military Spending, Not Recovery Stimulus

And here's another thing a new Cold War guarantees: a significant increase in military spending at a time of ballooning national debt and a desperate need for investment in domestic economic recovery.

By the end of June, unless Congress votes additional assistance, much of the $2.2 trillion in emergency pandemic relief voted by Congress will have been used up, leaving millions of jobless Americans and many small business owners in dire straits. Democrats in the House of Representatives did unveil a plan for an additional $3 trillion in emergency funding, including aid for struggling states and cities and another round of direct payments to citizens. White House officials and many Republicans insist, however, that any further giveaways to ordinary Americans will raise the federal debt to unsustainable levels (a problem that never worries them when it comes to tax cuts for corporations and the wealthy). So passing anything like that stimulus package appears ever less conceivable and July may leave millions of Americans unable to pay rent as well as other essential expenses.

When it comes to increased military spending, however, Republicans have no such qualms. Senator Tom Cotton of Arkansas, for example, has introduced a $43 billion Forging Operational Resistance to Chinese Expansion (FORCE) Act. (Nifty title, huh?) Its goal, he claims, would be to "help thwart the Chinese Communist Party's main geopolitical aim [of] pushing the United States out of the Western Pacific [and] achieving cross-strait unification with Taiwan via military force." It includes, among other things, $3.9 billion for another Virginia-class submarine (that's in addition to the $4.7 billion requested for such a sub in the Pentagon's proposed 2021 budget) and $3 billion for more of one of the most expensive weapons systems in history, the F-35 jet fighter (and that's in addition to the $4.6 billion requested for 48 of them in that same budget)

With the Democrats desperate to demonstrate their own anti-Chinese credentials, passage of the FORCE Act, or the somewhat more modest Pacific Deterrence Initiative introduced by Senators Reed and Inhofe, appears to be a sure thing. In fact, the need for yet more military funds may prove to be the Republican rationale for rejecting calls for additional pandemic relief.

But won't higher military spending act as an economic stimulus, just as it did during World War II when it helped lift the United States out of the Great Depression?

Indeed, passage of the FORCE Act or a variant of it will pump additional money into the economy. But today's military-industrial complex bears little relation to the one of 80 years ago when millions of workers were mobilized to churn out thousands of tanks and planes monthly in an all-out drive to defeat Nazi Germany. Nowadays, military hardware has become so complex that most of any dollar spent on a new plane, tank, or ship goes into specialized materials and computer systems, not armies of laborers. So the billions of dollars for one new submarine and additional F-35s are likely to generate only a few thousand extra jobs, while spending the same amounts on health care or elementary school education would generate many times that number.

Conscription

And then there's the issue that should be on the minds of every young man and woman in America (along with their parents, grandparents, and loved ones): the draft.

In contrast to the original Cold War, young men in this country are no longer obliged to serve in the U.S. military, though they (and their female counterparts) may choose to do so, whether for patriotic reasons, economic need, or both. Even though the United States has been continuously involved in "forever wars" since the 9/11 attacks, the armed services have been able to use a variety of economic and educational incentives to keep the ranks filled (and avoid the public outcry over those wars that would surely have accompanied a draft). This was possible in part because the numbers of soldiers engaged in combat at any given moment was not huge in comparison to, say, the Korean or Vietnam War eras and because vast numbers of troops were no longer on tap to "contain" the Soviet Union in Europe.

A full-scale Cold War with China could, however, prove another matter entirely, even if Pentagon manpower requirements were somewhat diminished by U.S. troop withdrawals from Afghanistan and Iraq. Large force deployments will undoubtedly be needed to engage in a modern version of the "containment" of China, not to speak of deterring the further adventurism of Vladimir Putin's Russia. Can this be done with an all-volunteer military? Not if tensions rise with Beijing.

Count on it: at some point, the question of conscription is bound to come up. So far, the Department of Defense has not opted for reinstating the draft--a move that would require congressional approval and undoubtedly ignite intense political debate of the sort top officials would prefer to avoid right now. Still, the leadership's overarching guidance, the National Defense Strategy of 2018, made it quite clear that the United States must expect to face years of intense rivalry with its "great power competitors" and that such an epic struggle could well require the full mobilization of America's war-making capabilities. "Long-term strategic competition [with China and Russia]," it claimed, "requires the seamless integration of multiple elements of national power." Conscription was not specifically mentioned, but given the new focus on a rising China and a reckless Russia, it will be on the table sooner or later.

Repression and Discrimination

Another feature of the original Cold War that you should expect in a new one is an environment of repression, intolerance, and discrimination. In this case, it would be against Chinese-Americans, Chinese students and researchers currently in this country, and non-Chinese viewed as in any way beholden to that power. Sadly enough, signs of this have already emerged. Officials from the FBI and the National Security Council have, for instance, been dispatched to leading Ivy League universities to warn administrators against admitting or retaining Chinese students who may be collecting scientific and technical information to share with government-sponsored institutions at home. Concurrently, some 30 Chinese professors with ties to such institutions have had their visas denied, despite a history of collaboration with American academics. In a more dramatic move, the chair of Harvard University's chemistry department, Charles Lieber, was arrested in January for failing to report income he had received from a Chinese university.

Many American academics have criticized such actions as an assault on academic freedom. Increasingly, however, U.S. officials insist that they represent a necessary component of the new Cold War. And while those officials also insist that our adversary in this struggle is the Chinese government or people associated with it (however tangentially), many Chinese-Americans are increasingly experiencing suspicion and hostility just for being Chinese. "Chinese-Americans feel targeted, and that's really hurtful," said Charlie Woo, a prominent Chinese-American businessman.

The experience of the first Cold War suggests that this sort of intolerance and repression will only increase with potentially chilling effects on intellectual freedom and the already deeply unsettled racial situation in this country.

Hot War

And never forget that cold wars always risk becoming hot ones. Looking back, it's easy enough to remember those years of the U.S.-USSR standoff as a relatively war-free era, since the two superpowers were fearful that a direct conflict of any sort between them might spark an all-out thermonuclear conflagration, leaving a planet in ruins. In reality, though, both sides engaged in a grim assortment of bloody "proxy wars"--regional conflicts in Korea, Vietnam, and Afghanistan, among other places, involving troops from one superpower and local allies armed by the other. In addition, the U.S. and the Soviet Union nearly found themselves in direct conflict on several occasions. The most notable, of course, was the Cuban Missile Crisis of 1962, when Moscow installed nuclear-armed ballistic missiles in Cuba and the U.S. nearly went to war--which would probably have turned into a nuclear conflict--to remove them. Only a last-ditch negotiating effort by President John F. Kennedy and his Russian counterpart, Nikita Khrushchev, averted such an outcome.

It's easy enough to imagine that both contemporary versions of such proxy conflicts and of the Cuban Missile Crisis could emerge from a growing confrontation with China. An incident on the Korean Peninsula, no matter how it was sparked, could quickly turn into just such a proxy war. The greatest danger, however, would be U.S. and Chinese forces facing off directly, perhaps due to a naval clash in the East or South China Sea.

At present, American and Chinese warships encounter each other on a regular basis in those waters, often coming within shooting (or even ramming) range. The U.S. Navy insists that it's conducting permissible "freedom of navigation operations" (FRONOPS) in international waters. The Chinese--claiming ownership of, and often building up, the many small atolls and islets that dot those seas--accuse the American ships of infringing on their national maritime territory. On occasion, Chinese gunboats have sailed dangerously close to them, forcing them to shift course to avoid a collision. As such incidents multiply and tensions increase, the risk of a serious faceoff involving loss of life on one or both sides is bound to grow, possibly providing the spark for a full-scale military confrontation. And there can be no question of one thing: an intensifying Cold War with China will only increase the odds of such a thing happening.

No one can say at what point you or any of us will begin to feel the direct effects of this new Cold War, only that, as tensions and hostile acts heighten, the consequences will prove harsh indeed. So cheer now, if you approve of measures already taken to isolate and punish Beijing, but think carefully before you embrace a full-blown Cold War with China and all that it will entail.